I had a call last week from a woman who wondered where she could find out if certain homes for sale were approved for FHA financing. As I talked to her about the fact that, for the most part, it takes an appraiser to determine whether or not a home qualifies, I tried to explain what she would need to look for so she could avoid paying for appraisals on property that may not qualify. It occurred to me that there was a good blog post in that explanation so here it goes!
FHA appraisers do a different type of appraisal than appraisers for conventional loans. They are more concerned with the health and safety of the borrowers. They look at the standard things that all appraisers look at, and they take it a little further. FHA is not only concerned with the property value but is also concerned with things like handrails on steps, broken windows, lack of screens, evidence of rodent infestation and other issues that don’t affect a normal appraisal to the same degree. If the house was built before 1978 and may have the potential for lead based paint, the FHA appraiser looks for peeling paint. The FHA appraiser needs to see that the bedrooms have egress in case of a fire, the windows have to work and if there are burglar bars they need to have the code approved methods of opening them from the inside in case of a fire. They want to see smoke detectors. The FHA appraiser needs to see window screens if there isn’t central air conditioning. They look at the remaining life of the roof and the furnace and hot water heaters and want to see a stove in the kitchen. The utilities have to be on during the appraisal and they check that the various components are working. The appraiser looks for evidence of environmental contaminants like asbestos and mold. The FHA appraiser looks for earth to wood contact and other evidence of termites.
So for the most part, the home has to be livable. If the carpet can be cleaned or the house needs paint to make it clean and fresh, this will not generally be enough to cause the appraiser to require that the work be done before closing (or after). If you want to read the actual FHA appraisal guidelines you can see an article from HUD here. The basic HUD website can be found here and the FHA Appraisal page has an overview of the entire process.
404-370-0050
{ 118 comments… read them below or add one }
← Previous Comments
I am seeking to buy a house through a FHA loan. There are no appliances in the home, what are the required appliances that a home must have in order to be approved through FHA? Also, the home has a pool, what will the appraiser check for in the pool?
Typically they require a stove and if there is a spot for a dishwasher, or a vent hood and one is not there, then they require that those appliances be replaced. The pool would be checked for being in normal working condition and that it is protected by a fence.
Again, I am not an appraiser, I am a Realtor, so this is my opinion as I understand it. No guarantees that they will not find another issue.
We are looking to purchase a second home using FHA lending and we found out there is an exhisting FHA appraisal already on this home. The appraisal states that the roof needs to be replaced. Some shingles are starting to curl, but the appraiser that we sent out there believes that the roof does not need to be replaced. We are bound by the existing appraisal. Can we contest their roof recommendations?
You can contest that, but you will probably have better luck asking the seller to replace the roof rather than getting an appraiser to change his mind. In my experience that rarely happens.
I would tend to agree that curling shingles are the signal that it is nearing the end of its useful life. In this market we are seeing sellers agreeing to this type of concession more and more.
I have another annoying question… We just had our home inspection last night. In the attic on a very small part of the eaves there is black staining(the inspector said he was pretty sure it was mold). We have a FHA 203K loan. Does mold automatically mean the loan will be denied or would we be able to clean it up after closing? It is bank owned and sold as is.
Look at the EPA’s report on mold in the home and you will see that the solution for most mold issues is stop the leak and clean with bleach. The dangerous type of mold is not generally caused by rain leaks, but by plumbing leaks that never dry out. Most appraisers don’t look in the recesses of the attic. If they do someone will have to clean it.
Read the EPA’s report and don’t fall for the hysterics of the people who make their living scaring people about mold.
I am only 8 days away from my close date. My lender has been *very* difficult to work with and I can never get them on the phone. They swear my FHA appraisal was done 3 days ago, but I have yet to get a report and the rare time I get through to anyone on the phone there they say “the report is coming, we should have it end of day today or first thing tomorrow”… and I’ve now heard that 3 days in a row, but still no report.
Is there any way to find out who the appraiser was who did the report and try to contact them directly to find out when I can get it? I am VERY concerned because I have very limited time (and money) to do any repairs and it’s making me crazy that I don’t know what this particular report will require.
Any way to find out who the appraiser is directly through FHA and get info on the report without having to wait on my slow-as-molasses (and much harder to reach!) lender?
Thanks for any advice you have!
Ever since the HVCC (home valuation code of conduct) passed at the beginning of this year, the appraisers and the lenders and the home buyers are not allowed to talk. I don’t think you will be able to find out how to contact him. Not through normal channels, anyway.
It’s better to just wait for the report to come back. Because of the large number of people trying to get in on the tax credit which is still expiring at the end of Nov. the appraisers, underwriters and lenders are slammed. When you push, sometimes they move your file down in the stack just out of spite. You will accomplish more with honey than vinegar!
Thanks Dan, I actually came across the same web page in my google search right before I came back to see if you replied. We aren’t scared of the mold, just the appraiser finding it. It is being caused by the insulation covering the vents to the outside. Very easy remedy. Our loan officer and Realtor both said what you said, they wont look up there(most likely).
Thanks for answering my question, over a year after your original post. You are so nice to help all us confused home buyers find answers!
Glad to help!
could you please telll me if the fha appraiser come to to appraise a home you are buying and done,should i get my own inpector to inpect for me again or just believe what they say
thank
I would always recommend getting your own inspection. Appraisers don’t generally crawl into the crawl space or go into the attic, you need to know what you are buying.
I just had an appraisal done on my home for a reverse mortgage and they sent out an fha appraiser. Extremely low appraisal. He said that since my grade level only has one bedroom he can only have square footage for that one bedroom. The other 2 bedrooms are in the basement. Also I have an enclosed front porch that is completely redone to be a family room with heat and insulation and no door between it and the rest of the house. He said this also cannot be counted as living space. We are extremely confused. Also what constitues a bedroom, just having a bed in it? Because we could put a bed in the enclosed front porch that is now a family room if that would make it living space and another bedroom. The house also has a family room and bedroom and full bath in the basement, which I was told doesn’t count because it is below the upper grade. It is basically a split level home. At one time the basement was a drive under garage. It has been completely finished into the above mentioned rooms. Could you give me any input. We are totally confused. We actually have a 1700 square foot house and he is saying it is a 780 square foot house with 1 bedroom and 2 baths.
Any help would be greatly appreciated.
Thanks in advance
Teresa
It is normal for appraisers not to count finished basements as part of the overall square footage. Below grade means below the ground, even if it is just one wall that is below ground.
In terms of making a room into a bedroom, it has to have a window that opens (for egress in case of fire) and a closet, and a door that separates it from the rest of the house.
Did you ask why the enclosed front porch was not counted? The only reasons I could imagine was if the work was done without permits, or if the porch was on posts so the cold air could get under the floor.
Dan,
thank you so much. As for the porch, it is on a concrete slab, insulated, completely finished with paneling, heat and no door between it or the rest of the house. More like a family room.
It was done with a permit.
The appraisers have lost it. I think it boils down to the fact that if they make a mistake they could be fired and therefore they are making some bad calls. It doesn’t impact them if they under appraise, only if they over-appraise. If an appraisal is reviewed and the findings are challenged, the appraiser might lose his job over a bad call, so the review appraisers are reluctant to reverse any of another appraiser’s calls.
i have a question regarding an fha appraisal on a manufactured home i wish to purchase in florida. when the appraiser is listing comparable sales in the area. how far back is the appraiser allowed to go when checking recent sales in the area. is it 30 days, 6 months, one year? and what distance do the comparable sales need to be from the home. thanks
FHA appraiser has a comp that is only several blocks away; it is a house that was purchased by government agency for Section 8; purchase was from a HUD foreclosure. Appraiser says that he can’t use that as a comp but won’t give a reason. Can you advise. Thanks.
I am unfortunately at a loss to understand why the FHA appraisers do what they do. Some folks are upset that they use recent foreclosure sales as comps because they are generally under the market. There are many reasons why an appraiser won’t use a particular comp. It is supposed to be similar, so if it is substantially bigger or smaller, if your house is newer and the comp is much older or vice-versa, if the comp is a brick ranch and yours is a craftsman’s bungalow, things like that will make them look for other comps.
My house was inspected through FHA for a loan last week. loan officer told me appraiser mentioned on appr. report that I have a broken window & security bar on the windows, that is not allowed by FHA therefore the bars need to be removed. The broken window i can fix but I dont want to remove the bars i think will cost too much the windows had keys but i lost them. Iam trying to figure out how to get keys for the bars but dont know if its cheaper to buy new locks? If i get bars with keys will my house be FHA approved?
I think that the keys won’t help. If you don’t have the key and there is a fire you could be trapped in the room. If the lock has a single deadbolt with a turn handle on the inside, they may let you get away with that. It’s up to the appraiser and they don’t seem to have a universal approach to different issues.
I am a loan officer trying to do a FHA Refinance in Hawaii, the property in the rear 2 bed 2 bath that is unrented and done in a workman like fashion is not permitted, The borrower is 73 so will FHA insure property as an FHA Refi or A reverse mortgage
Thanks,
Glenn
Sorry Glen, I really don’t have any experience with reverse mortgages. I think that technically the work should have been permitted in order for it be considered, but whether or not the appraiser picks up on that is up to the luck of the draw. With the reduction in fees that the appraisers get with the HVCC rules, we see some that you have to wonder if the appraisers even went inside the house. I can’t really answer your question though in relation to reverse mortgages. As far as I know, a 73 yr old could get an FHA loan as long as the income and credit were there.
I’m purchasing a small 1000 sq ft townhouse in a pleasant complex-built in 1985 and generally in good shape for the age of the building. I’m applying for an FHA loan. The condo has nice floors, new carpet, new windows, new HVAC and water heater. The problem is that the building has settled. A closet door in the kitchen rubs over an uneven spot on the floor and the floor dips slightly. It’s built over a crawl space. I paid for a home inspection and the inspector went into the crawl space taking pictures and noting that there was a floor jack under the building. It’s oviously uneven. Will this pass FHA muster?
The problem that we face today is that there is no system of checks and balances in the FHA appraisal process. What gets past one FHA appraiser can be stopped cold by another. I have see homes with no appliances appraise and others are required to have appliances installed prior to closing. They may or may not pass it, and if they don’t, that will be difficult to get past, the review process rarely turns over any decisions.
Hey Dan,
We just had an FHA appraisal for a home we’re purchasing and I’m a little confused about something. His “value” came in at $112,000…we offered $110,000 on the home because EVERYTHING we’ve seen on it says it’s worth much more. All the realtors, inspectors, everyone who’s seen it has said they can’t believe the deal we got at $110,000. The area is very strong in holding value as well…even the county auditor only dowgraded the area by 3.5% for the newest 2009 appraisals. Some areas of the county lost 15-20% in this market.
Now I know the auditors site has traditionally been low in their appraisals to keep taxes in check…but even they have the house valued at $121,000 for tax purposes.
The last time the house sold was 2002 and is sold for $135,000…and that wasn’t even the height of the market like it was in 05-06…..
I just don’t understand how this appraisal could’ve come in so low…now I feel as if we didn’t get a deal at all…I mean it’s even a foreclosed home!
I have heard that appraisers often “say” the house is worth only slightly more than what the house is selling for, so as not to create any problems between the buyer and seller. For example, the seller wants $110,000, but then the appraiser says the house is worth $170,000…the buyer then might say they don’t want to sell for $110,000 anymore. Is there any truth to this? Do some appraisers go just a little above the selling price?
Any information you could provide would be appreciated…I’m just a little upset as I feel like maybe the house isn’t worth what EVERYONE else thinks it is, and therefore maybe we overpaid…
Brian
I have always seen appraisals come in close to the purchase price. I think that the appraiser is instructed to keep it close, although I have no proof of this. I have heard the explanation that you gave and I have also heard that the lenders in conventional loans don’t want the appraisal to come in too high because people could contest the PMI.
I had a loan that was turned down this year because a buyer was paying 135,000 for a house that appraised for 189,000. The lender saw this as a red flag and would not make the loan. The saw it as evidence of declining values. That was a conventional loan and we did get the loan through with the FHA.
There are a lot of people out there who have had property appraise for well under the sales price who would love to trade places with you.
I’m selling a home and am in escrow with buyers using FHA. The appraiser report listed my property as 0.92 acres (when it is actually 1.14 acres). His report also values it $15k below the offered sale price. When I challenged the report, and asked that the 9,000 extra square footage of the lot be included in a revised report, I was told that it would not make any difference in the appraisal price. Does lot size not play a determining factor in these types of appraisals as far as home value is concerned? For my neighborhood, lot size is one of the most defining factors. Any input on this issue is appreciated.
I am sorry this response took so long. The bottom line is that you are at the mercy of the appraiser that was assigned to your loan and there is not much that you can do about his ruling. Typically in our area (and this is a local issue that does not necessarily transfer across the company), as long as you have a lot that is not considerably smaller than the average lot in the neighborhood, the lot size does not add value unless it is so big that the property could be subdivided without any variances. But it is important to also know that you cannot typically get a loan on vacant land.
i plan to apply for an equity loan soon, my 3500sq.ft. house still has 2 rooms unfinished (not sheet rocked). Can I still get an appraisal value for my home?
Remember I an a REALTOR not an appraiser. My understanding is that you can get an appraisal on your home, they just won’t count the unfinished rooms. This is as long as you have enough finished space to be a usable home. In other words if you don’t have any finished bedrooms, probably not.
I just had an appraisal done by a home I’m planning to purchase with an FHA mortgage. The appraiser said that the basement had some standing water which my mortgage broker stated was a small amount. The appraiser stated the basement needs to be cured and waterproofed. No one can tell me exactly what this means. My contract states “as is” and I would be responsible for these repairs prior to closing. FYI: I did have a home inspection also which the inspector did find evidence of a previous leak, there was a small damp area 2ft by 2ft.
Even though the contract states as-is, you may still be able to convince the seller to fix it. If you do the work yourself you may lose that money if something happens and the sale doesn’t close. Your contract will dictate what happens. In Atlanta GA the FHA addendum states that if the property does not appraise the buyer does not have to complete the purchase without penalty (loss of earnest money). So if the seller wanted to close they would have to do the repairs or you could walk away.
If the subject property has a completed space consistant in quality of construction as the main living AND can be entered through the main living area without having to exit the main home and re-enter, it can be considered living square footage (meaning, you can move freely from that added room to other living areas.)
I closed on my FHA loan approved home in June 2009. Since the snow fall I have found there is a leak between the chimney and the exterior which has infiltrated in one of the bedroom walls. Now the wall is buckling with the water damage and mold is definitely there.
Is there any recourse for me since this will require some repairs to the outside structure as well as the interior walls of the bedroom? This is a major safety hazard that greatly concerns me.
FHA has forms that you sign when you close that state that they have nothing to do with property condition and make no warranties. So any recourse you would have would only be with the seller. You would have to have evidence that the seller knew about the leak and hid that from you.
Did you have the home inspected? If so, check and see if the inspector saw any signs of leaks.
As far as the mold goes, my understanding is that the toxic mold does not typically come with roof leaks, it has to be an ongoing plumbing leak or a flood where the water sits for a long time. You can read what the EPA says about them here: http://www.epa.gov/mold/moldguide.html The field of mold remediation is rampant with contractors who make their living scaring people about mold. Be careful. The fix can be as simple as stopping the leak, treating the affected areas with clorox and replacing any damaged plaster or sheetrock/drywall.
Hello. How often will seller pay for lender required corrections if any as indicated in FHA Appraisal. Seller converted small area in 6 car gar to a work out rm with wood flooring, and inside house turned a bonus rm into a bd rm adding french doors, which req some entrance wall structure change adding double doors leading into rm. Thank You for any info you can give.
clueless
There is no rule but in our market it seems like the sellers are more willing to do lender required repairs than ever before.
Dan,
I have a rural home that is in average condition, however there are no floor coverings in one of the bedrooms and some of the drywall that we have replaced has not been taped and mudded yet. The appraiser mentioned these things in the report but said it still met hud requirements because there were no major structural deficencies and there were no safety or health issues. The underwriter said that it does not meet hud requirements, and wont close the loan. What is your opinion on this discrepencey.
In a conflict between the appraiser and the underwriter you will have to get the underwriter on board if you want the loan to close.
Hi Dan,
I am a Realtor in Alabama and I have been searching the internet for hours looking for some kind of guidlines on FHA loan approvals. You have been very helpful! I just wanted to say thank you for your blog!
I appreciate that!
Your definition of bedroom which includes having a closet does not hold in New Mexico. Here Realtor’s commonly list rooms that do not have a closet as a bedroom. The rooms do generally have a window no more than 44 inches off the ground. Does FHA have a standard definition nation wide for what constitutes a bedroom? And, do appraisals look at homes that have the same number of bedrooms (i.e., with built in closets) or does the square footage of livable space have more weight than the number of “true” bedrooms (i.e., rooms with “a built in closet”?
Again, I am a Realtor in GA, not an appraiser. As I understand it, the appraisal standard is to look at square footage as a primary tool is establishing value, so a 2/2 home and a 3/2 home with the same square footage could have close to the same value. I believe that being said, a bedroom has to have a closet to be counted as a bedroom, even though agentss everywhere commonly call rooms without closets “bedrooms” trying to get as many prospective buyers in as they can to look at the property. I don’t know if FHA has a nationwide standard in establishing bedrooms.
Help! My husband and I were pre-approved for loan refinancing 3 months ago. Since that time we paid to have the home appraisal done, and have completed all the paper work, and jumped through all the hoops. Keep in mind this has been going on for 3 months. There is always some excuse given as to why things are taking so long, but come on, three months? I got an e-mail from our lender today saying the loan was denied….but no explination as to ‘why’. My question is, since we were cleared in the very begining for this loan, and paid the appraisal fee, can I get that fee back??? This loan company is very sllllooooooow to respond, if at all, to any questions we’ve had in the last 3 months, so I’d like to know if we have any recourse? HELP??
I think you probably can’t get your appraisal fee back. They should tell you why you were declined though! If the house appraised and you had a credit issue, sometimes you could get the credit issue straightened out and try again.
← Previous Comments